How corporate power hijacked democracy

You don’t have to be a radical to think that what passes for democracy in capitalist society is a fraud. 

Politicians are so obviously influenced by extra-parliamentary networks of power that only the most blinkered ideologue would argue that the average Australian has as much influence on politics as say, Rupert Murdoch or Gina Rinehart.

For the most part, parliamentary insiders keep quiet about the extent of the big business takeover of politics. Why rock the boat when you can look forward to your generous parliamentary pension being supplemented by lucrative sinecures with the very same big corporate interests that you’ve so loyally served in Canberra?

An exception is former Greens senator Scott Ludlum. In parliament for nine years up until 2017, Ludlum provides us with an insider account in a recent essay for the Monthly, “How politics works in Australia, and how to fix it”.

Ludlum was disheartened by what he called parliament’s “brittle simulacrum of genuine democracy”. “The contamination of the body politic”, he writes, “begins way upstream of parliament’s chambers, through relationships forged way back in elite private schools, an IV drip of campaign donations, or the revolving door between ministerial offices and industry peak bodies.

“On any given sitting day, parliament hosts a swarm of lobbyists distributing prefabbed opinion polls and economic modelling proving that any attempt to tax or regulate their patrons will cost jobs and cause the Earth to spiral into the Sun.

“On questions affecting powerful economic interests”, he argues, “the two major parties quietly collapse into a one-party state”.

We’ve had five different prime ministers in the past eight years. Yet, despite the tumult in Canberra, life for the majority of Australians has barely changed. On the measures that impact most on our daily lives – job security and wages, the cost of housing and utilities, the quality and accessibility of social services – things are, if anything, going backwards. 

Meanwhile, those at the top are doing very well indeed. The wealthiest 1 percent of Australians now own more than the bottom 70 percent combined. In the decade since the global financial crisis, Australia’s billionaire class has increased its fortune by a massive 140 percent. Over the same period, average household wealth grew by just 12 percent.

Our democracy is rigged for the rich. That much is clear. What’s less clear is exactly how they carried off the heist. 

Corporate ‘dark money’

According to the Australian Electoral Commission, the Liberal Party’s total private income for the 2016-17 financial year was $43.3 million. The Labor Party’s was $38.9 million. Most of this is donations. 

Exactly how much comes from corporate Australia is impossible to determine. Under Australia’s disclosure laws, only donations more than $13,200 must be reported.

Donors (and political parties) can avoid unwanted scrutiny simply by breaking their donation into smaller units. Parties also use creative accounting practices to rebadge donations as “other receipts” – such as holding fundraising dinners with expensive ticket prices, the purchase of which is reported as a fee for service rather than a donation.

According to a Grattan Institute report due for release in late September, the preliminary findings of which were given to the ABC, there’s no way of tracing the source of $60 million worth of donations to Australian political parties in the 2016-17 financial year.

Those we do know about read like a who’s who of corporate Australia. ANZ Banking Group, Wesfarmers, PricewaterhouseCoopers, Woodside Energy, Westpac, Crown Resorts, Macquarie Group, KPMG Australia and many more companies and wealthy individuals donated tens or hundreds of thousands of dollars.

This isn’t just a matter of building general goodwill toward corporate Australia among the political class. As with everything else under capitalism, political donors expect a return on their investment. One indication of this is the spike in donations from particular industries at times when decisions relevant to their interests are being made in parliament. 

Take mining. Over the past decade, the industry’s biggest year for donations, by a significant margin, was 2010-11. That year, the industry gifted $3.8 million to political parties, with the vast majority, $3.5 million, going to the Liberals. 

What happened in politics that year? In April 2010, Labor prime minister Kevin Rudd proposed a mining industry super-profits tax. The mining industry’s “investment” in the Liberals was part of its campaign against Rudd.

And while it narrowly failed to get the Liberal Party over the line in the August 2010 federal election, the industry managed to get Rudd replaced as Labor leader by the more “mining friendly” Julia Gillard, who duly scrapped the tax.

Earlier this year, in a submission to the senate inquiry into the political influence of donations, the Minerals Council of Australia (MCA) gave the game away.

“The MCA makes political contributions”, it explained, “because they provide additional opportunities for the MCA to meet with members of parliament … The MCA uses these opportunities to update members of parliament about conditions in the Australian minerals industry and the policy priorities of the MCA”.

The message is clear. If you’ve got pockets deep enough to gift tens of thousands of dollars to the major parties, you can expect to receive easy access to ministers and other parliamentarians to update them on your “policy priorities”. If you’re an ordinary citizen, you’ll get to vote for your local representative once every few years. In between you can write a letter.

Political lobbying

Another link in the chain connecting the political elite to Australia’s captains of industry is the army of lobbyists that daily advance the interests of their corporate masters. 

You could think of it like this: political donations open doors, corporate lobbyists go through them. But this doesn’t capture the cosiness of the relationship.

For the most part, corporate lobbyists don’t have to go through doors for the simple reason that they’re already on the inside. 

An analysis by the Guardian found that, of 483 lobbyists registered with the Department of Prime Minister and Cabinet, “more than half were previously inside government, the bureaucracy or party organisations”.

“In some cases”, the Guardian journalists write, “defence officials are leaving their posts to help arms manufacturers vie for lucrative government contracts, or senior advisers are leaving health or resources ministers to lobby for big pharmaceuticals or mining giants”.

One example uncovered is of Sean Costello, who was chief of staff to then defence minister David Johnston from June 2014 to January 2015. During that time, the government was planning its $50 billion Future Submarine program. 

Two months after leaving his role with Johnston, Costello became chief executive of the Australian arm of French submarine maker DCNS. In 2016, DCNS, rebranded as Naval Group, won the contract to build Australia’s new fleet of submarines.

The links also go the other way. New prime minister Scott Morrison has taken on John Kunkel as his chief of staff. Kunkel comes fresh from his role as head of government affairs at Rio Tinto. Before that, he spent six years as the deputy CEO of the Minerals Council.

In addition to the registered lobbyists, government relations advisors and so on, there are the industry peak bodies and corporate-funded think tanks whose raison d’être is to promote policies that benefit big business. 

To the already mentioned Minerals Council, add the Business Council of Australia, the Australian Chamber of Commerce and Industry, the Australian Strategic Policy Institute, the Property Council, the Australian Petroleum Production & Exploration Association and the Institute of Public Affairs, to name just a few.

These very well resourced and well connected organisations play a highly active role in Australian politics. They do this publicly through appearances in the media, the production of briefings and reports and submissions to parliamentary inquiries. And they do it privately through regular meetings with senior representatives from government and the public service.

The mainstream media, although different in some respects, operate in a very similar way. Rupert Murdoch and other owners have political agendas, which they pursue via their publications and networks. 

In a recent opinion piece in the Sydney Morning Herald about Murdoch’s role in the toppling of Malcolm Turnbull, Kevin Rudd labelled Murdoch “the greatest cancer on the Australian democracy”. “Murdoch is not just a news organisation”, Rudd wrote. “Murdoch operates as a political party, acting in pursuit of clearly defined commercial interests, in addition to his far right ideological worldview.”

It’s not just Murdoch. No mainstream news organisation is without a political agenda. It may be more obvious with Murdoch, but Fairfax, the ABC and the rest are all just as much engaged in the campaign to shape politics in line with their commercial interests and/or their views about what is in the “national interest”.

Ruling class, ruling culture

In his classic work State and Revolution, Russian revolutionary leader Vladimir Lenin described how the capitalist state is “bound by thousands of threads” to the ruling class. The connections forged through political donations and lobbying are only a small part of this.

More important are the organic connections that bind corporate Australia with the government, bureaucracy and military. The “relationships forged way back in elite private schools”, as Scott Ludlum expressed it. 

Australia’s political elite and top public servants share with corporate Australia a common culture and world view. For example, captains of industry don’t have to donate to political parties or send lobbyists to parliament to convince parliamentarians and public servants that the profitability of Australian big business should be the overarching goal of economic policy, or that the military alliance with the United States is sacrosanct. 

These are things that were learnt in their years at top private schools and universities, and reinforced through constant interaction – both formally through regular rounds of consultation and informally through participation in the same corporate conferences, business lunches and so on.

The members of this elite layer are often more than just acquaintances – they’re friends. They dine at the same restaurants, drink at the same bars and send their children to the same expensive schools. They help each other out when someone’s au pair falls foul of immigration laws. 

For these people, the “national interest” is a euphemism for their collective interests. However much they may pay lip service to democracy, in practice the majority of politicians and senior public servants view the opinions and aspirations of ordinary people with contempt.

They ensure important decisions are protected from democratic scrutiny by handballing them to advisory bodies stacked with government-appointed “experts” and corporate heavyweights.

Their integration as a social class is reflected not only in the revolving door between lobbyists and government but also in the constant interchange of staff between the boardrooms of corporate Australia and the upper echelons of politics.

Research by University of Wollongong lecturer Adam Lucas, for instance, found that “more than 200 individuals have moved between positions in the fossil fuel and/or mining industries and senior positions in government, or vice versa, over the past decade”. 

“This revolving door”, he argues, “might be better dubbed a ‘service elevator’, ensuring that ‘delivery of the goods’ happens away from public scrutiny”.

You might wonder why all the donations and lobbying are necessary. To understand, Marx’s classic definition of “the executive of the modern state” as “a committee for managing the common affairs of the whole bourgeoisie” is helpful.

The state manages the affairs the capitalist class as a whole. As such, it must retain a degree of independence from the interests of any particular section. 

The purpose of donations and lobbying isn’t to ensure that the government acts in the interests of the capitalist class in general, but to help particular capitalists or sections of capital win for themselves the greatest possible share of the spoils.

How can we win the battle for democracy?

Corporate power can’t be countered from within the halls of parliament. As US historian Howard Zinn put it, “What matters is not who’s sitting in the White House. What matters is who’s sitting in!” Scott Ludlum makes a similar point: “What happens outside parliament intimately shapes and conditions what can happen within. More than this, it changes the scope of what’s possible”.

Reforms are never simply handed down from on high by political leaders in parliament. Whether it was the eight-hour day, women’s suffrage, welfare, equal pay, Aboriginal rights, LGBTI rights – the list could go on – all were won on the back of determined campaigns of protests, strikes and sit-ins by workers, students and the oppressed.

This is a reality that Ludlum himself would have done well to pay more heed to. The Greens may once have been a party of protest, but these days they’re well along the path to the respectable centre. They are just as ensconced in the parliamentary game as the major parties.

Playing this game means following its rules. And the most important rule is that nothing may be done to harm the interests of the capitalist class.

This rule is enforced via the mechanisms discussed above. But beyond all that, one more, very powerful, backstop remains: the threat of capital strike. In the face of, say, a significant hike in corporate taxes, the capitalists can threaten to shut down production.

The threat alone would likely be enough to bring about a significant economic downturn, increase unemployment and so on. Enough, in other words, to force even the most recalcitrant governments into line.

The power of big business rests, in the final analysis, not on its connections with the state, but with its control of the wealth and productive resources needed to keep society running.

Capital doesn’t need parliaments and democracy to function, and capitalists have historically been happy to support coups and dictatorships when it is in their business interests. But they do need workers. Without workers, no wealth can be generated and no profits “earned”. 

This is the power our side has to counter their deep pockets and political connections. This is the democratic answer to the sham that passes for democracy in modern capitalism. Most of the time, workers exercise their power on a very small scale, with strikes forcing business owners to improve workers’ wages and conditions. In times of heightened struggle, however, industrial action can drive change on a much broader scale. 

During these times, we get a glimpse of what genuine democracy might look like. Not voting once every few years for someone to represent us in parliament, all the while being subject to the dictatorship of the bosses at work. But engaging in mass, democratic decision-making on the major questions of society on an hour by hour, day by day and week by week basis.

Ultimately, in a revolutionary situation, the institutions of workers’ democracy forged through struggle form the basis for a totally new way of organising society. One based not on the imperative to private profit, but on the collective, democratic control of society’s productive resources in the interests of workers and the poor.

“Democracy for an insignificant minority, democracy for the rich – that is the democracy of capitalist society”, Lenin argued in State and Revolution. Parliament can provide a platform to articulate an alternative vision of society and put forward policies that can inspire people to fight for change. But the real work needs to happen elsewhere.